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Business A Level > 3.1 > Flashcards

3.1 Flashcards

1
Q

What are private sector organisations?

A

Includes all businesses set up by individuals or groups, can be incorporated or unincorporated

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2
Q

What is incorporation?

A

The legal process where a business and its owners become a separate legal identity, when a company is created

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3
Q

What are unincorporated businesses?

A

Businesses where there are no legal separations between the owners and the business, owners have unlimited liability

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4
Q

What is an incorporated business?

A

Businesses with a separate legal identity from the owners, owners have limited liability

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5
Q

What is limited liability?

A

Owners can only lose what they invest in the company, personal assets are not at risk

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6
Q

What is unlimited liability?

A

Owners are personally responsible for all the businesses actions, can lose personal assets if in debt

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7
Q

What are sole traders?

A

The simplest form of a private sector business, owned by one person, unlimited liability, owner keeps all profits

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8
Q

What is a partnership?

A

Business owned by one or more person, partners share responsibility and profits, unlimited liability

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9
Q

What are limited companies?

A

Businesses that have gone through incorporation, have a separate legal identity to their owners, owners liability is limited to their investment

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10
Q

What is market capitalisation?

A

Market capitalisation represents the total market value of the issued share capital of a company

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11
Q

What are public limited companies?

A

PLCs trade their shares on the stock market and can raise large sums of money from the public. They must abide by various company acts

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12
Q

What are private limited companies?

A

Private limited companies have limited liability, shares can only be transferred privately, and profits have to be shared with shareholders

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13
Q

What are not-for-profit organisations?

A

Organisations focused on social or ethical objectives rather than profit maximisation, including charities and social enterprises

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14
Q

What are charities?

A

Established to collect money for specific causes, run according to business principles, and aim to maximise costs while raising for good causes

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15
Q

What is a social enterprise?

A

Businesses with a social or environmental purpose that can sell products or services, reinvesting profits to make a social impact

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16
Q

What are shareholders?

A

Invest in companies for potential returns on investment, dividends, capital gains and decision making power in the company

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17
Q

What has influences on share price?

A

Factors such as type of business, mission, objectives, decisions and performance that affect the value of a company’s shares

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18
Q

What is a sole trader?

A

A business owned and operated by one individual, centred around personal goals and potentially rapid responsiveness

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19
Q

What are the advantages of a partnership?

A

Two or more owners,
More capital available,
Relatively easy to start,
Income taxed once as it’s personal income

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20
Q

What are the disadvantages of partnerships?

A

Unlimited liability,
General partnership,
Limited partnership,
Partnership dissolves when one partner dies or wishes to sell,
Difficult to transfer partnership

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21
Q

What are the advantages of sole traders?

A

Owner keeps all profits,
Owner can make decisions quickly,
No boss so arguments do not occur

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22
Q

What are the disadvantages of sole traders?

A

Unlimited liability,
Difficult to take holidays,
High risk so hard to borrow from banks

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23
Q

What are the advantages to LTDs?

A

Limited liability,
Can maintain control of the firm,
Profit figures can be kept secret

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24
Q

What are disadvantages to LTDs?

A

Not as much finance can be raised,
It is time consuming and costly to set up,
Legal documents must be prepared

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25
Q

What are advantages to PLCs

A

Shareholders have limited liability,
Large amounts of capital can be raised as able to sell on stock market,
Can borrow finance more easily as trusted by banks due to size
Due to size can benefit from economies of scale which allows PLCs to dominate a market

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26
Q

What are the disadvantages of PLCs

A

Control over the business is lost if others buy over 50% of shares
Profit figures must be made public
Must print prospectus for potential shareholders
Must pay stock market for listing and banks to sell shares

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27
Q

What is social enterprise?

A

A business with mainly social objectives that reinvests most of its profits into benefiting society rather than maximising returns to its owners

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28
Q

What is the external environment?

A

Elements outside a businesses control, including PESTEL factors: political, economic, social, technological, environmental and legal

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29
Q

What is PESTEL?

A

Political, economic, social, technological, environmental and legal

30
Q

What are political factors?

A

Government policies, regulations and stability affecting businesses

31
Q

What are economic factors?

A

GDP trends, inflation rates, and interest rates shaping customer behaviour

32
Q

What are technological factors?

A

Advancements driving innovation and operational efficiencies in industries

33
Q

What are environmental factors?

A

Sustainability practices and regulatory requirements impacting operations

34
Q

What are legal factors?

A

Laws and regulations governing business operations, employment and consumer protection

35
Q

What are market conditions?

A

Attractiveness of the market affecting all businesses in an industry

36
Q

What is consumer demand?

A

Customers desire and ability to purchase products or services

37
Q

What is economic growth?

A

Measure of the value of output in the economy

38
Q

What is demand?

A

Consumer desire and ability to pay for goods or services

39
Q

What is GDP growth?

A

Varies based on economic cycle and influence demand

40
Q

What is a competitive environment?

A

Factors influencing market completion and profitability

41
Q

What is price inflation?

A

Reduces consumer disposable income

42
Q

What is an impact of wage growth?

A

Increases consumer spending power

43
Q

What is an impact of an increased employment level?

A

Impact disposable income and consumer spending

44
Q

What does the Bank of England base rate influence?

A

Overall interest rates in the economy

45
Q

What are demographic factors?

A

Population size and composition impacting business demand

46
Q

What are environmental changes?

A

Business concerns about resources, energy use, waste and pollution

47
Q

What is government legislation and environment?

A

Acts protecting the environment and regulating pollution control

48
Q

What is fair trade?

A

Movement ensuring fair prices and conditions for producers in developing countries

49
Q

What is the external environment of a business?

A

External factors influencing business operations and decisions

50
Q

What are interest rates?

A

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding

51
Q

What is a business?

A

An organisation that exists to provide goods and services on a commercial basis to customers

52
Q

What are goods?

A

Physical products such as consumer electronics, industrial components and cars

53
Q

What are services?

A

Intangible products such as insurance, dental services and cleaning

54
Q

What is a mission statement?

A

A statement that determines the companies direction, focuses on the companies future, aligns objectives, makes decision making easier and motivates staff

55
Q

What is an effective mission statement?

A

One that differentiates the business, defines markets, involves stakeholders, excites, motivates and guides employees

56
Q

What are the problems with mission statements?

A

Criticism includes lack of support by business actions, vagueness, being viewed as a PR exercise and cynicism by employees and senior management

57
Q

What are objectives?

A

Set by businesses to ensure everyone works towards the same goal, motivates employees and measures business success

58
Q

What are SMART objectives?

A

Specific, measurable, achievable, realistic, time-bound

59
Q

What is profit?

A

The surplus of total revenue over total costs for a business over a period of time

60
Q

What is growth?

A

Exploiting market position to earn higher profits when a firm grows

61
Q

What is survival?

A

Aim for a business to continue trading over time

62
Q

What is cash flow?

A

The movement of cash into and out of the business

63
Q

What is social responsibility?

A

A businesses duty to make ethical decisions that positively impact society

64
Q

What is total revenue?

A

The money received from selling products, calculated as selling price multiplied by quantity sold

65
Q

What are fixed costs?

A

Costs that do not vary with output, such as rent, machine hire and marketing

66
Q

What are variable costs?

A

Costs that vary directly with output, such as raw materials

67
Q

What are total fixed costs?

A

The sum of all fixed costs for a business over a period

68
Q

What is average cost?

A

The total cost divided by the quality produced

69
Q

What is profit calculation?

A

Profit is calculated as total revenue minus total variable costs and total fixed costs

70
Q

Why is profit important?

A

Can motivate people
Good source of finance
Can be used to attract investors

Business A Level (3 decks)

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